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Lessons from the Kibbutz on the Equality-Incentives Trade-Off

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  • Ran Abramitzky

Abstract

The first kibbutz was established southwest of the Sea of Galilee in 1910, but the vast majority of kibbutzim were established in the 1930s and 1940s, shortly before the creation of the state of Israel in 1948. Founders aimed to create a "new human being" who cared about the group more than about himself, a homo sociologicus who would challenge the selfish homo economicus. This idealistic view can explain many of the key features of kibbutzim: equal sharing in the distribution of income; no private property; a noncash economy; communal dining halls where members ate their meals together; high provision of local public goods for use by kibbutz members; separate communal residences for children outside their parents homes, which were supposed to free women from their traditional role in society and allow them to be treated equally with men; collective education to instill socialist and Zionist values; communal production, whereby kibbutz members worked inside their kibbutzim in agriculture or in one of the kibbutz plants; and no use of hired labor from outside kibbutzim—because hiring labor was considered "exploitation" under the reigning socialist ideology. To an economist, steeped in thinking about incentives that self-interested individuals face, there are three reasons why an equal-sharing arrangement of this sort seems unlikely to last. First, high-ability members have an incentive to exit equal-sharing arrangements to earn a wage premium—so-called "brain drain." Second, low-ability individuals have an incentive to enter equal-sharing arrangements so that they can be subsidized by more-able individuals—so-called adverse selection. Third, in context of equal sharing, shirking and free-riding are likely to be prevalent. However, kibbutzim have survived successfully for the past century and currently consist of 120,000 members living in 268 kibbutzim. In a number of ways, the kibbutzim offer an exceptional environment to examine the potential trade-off between equality and incentives.

Suggested Citation

  • Ran Abramitzky, 2011. "Lessons from the Kibbutz on the Equality-Incentives Trade-Off," Journal of Economic Perspectives, American Economic Association, vol. 25(1), pages 185-208, Winter.
  • Handle: RePEc:aea:jecper:v:25:y:2011:i:1:p:185-208
    Note: DOI: 10.1257/jep.25.1.185
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.25.1.185
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    References listed on IDEAS

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    Cited by:

    1. Assaf Razin, 2017. "Israel's High Fertility Rate and Anemic Skill Acquisition," CESifo Working Paper Series 6455, CESifo Group Munich.
    2. Avraham Ebenstein & Moshe Hazan & Avi Simhon, 2016. "Changing the Cost of Children and Fertility: Evidence from the Israeli Kibbutz," Economic Journal, Royal Economic Society, vol. 126(597), pages 2038-2063, November.
    3. Guillermo Alves & Gabriel Burdin & Paula Carrasco & Andrés Dean & Andrés Rius, 2012. "Empleo, remuneraciones e inversión en cooperativas de trabajadores y empresas convencionales: nueva evidencia para Uruguay," Documentos de Trabajo (working papers) 12-14, Instituto de Economía - IECON.
    4. Adnan, Wifag, 2015. "Who gets to cross the border? The impact of mobility restrictions on labor flows in the West Bank," Labour Economics, Elsevier, vol. 34(C), pages 86-99.

    More about this item

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • P13 - Economic Systems - - Capitalist Systems - - - Cooperative Enterprises

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